empty
28.02.2025 09:49 AM
Stock market throws in towel

Trouble never comes alone. The S&P 500 plunged to its lowest levels since mid-January as Donald Trump reignited tariff threats. First, negative economic data from the US, then NVIDIA's earnings report that failed to impress investors, and finally, new import tariffs forced the bulls in US equities to throw in the towel. The fire was further fueled by Tesla's sell-off, with its shares returning to levels last seen during the November presidential elections.

Markets doubt that Elon Musk, who has now taken on the ambitious task of trimming the US government workforce, will have time to focus on his own company. Tesla's sales in Europe plummeted by 45% in January, serving as a catalyst for the stock's nosedive and dragging the S&P 500 down. Meanwhile, Donald Trump appears unlikely to throw a lifeline to the broad stock index.

The US president announced additional 10% tariffs on Chinese imports, sparking outrage in Beijing. Chinese officials have warned that if the US insists on its own course, China will have no choice but to defend its legitimate interests. According to a Harris poll for Bloomberg, 60% of Americans believe tariffs will accelerate inflation, while 44% think they will slow the economy.

US Imports from China, Mexico, and Canada

This image is no longer relevant

US equities face further pressure as Trump plans to introduce 25% tariffs on imports from Mexico and Canada starting in March. The close ties between US companies and their North American neighbors risk disrupting supply chains, increasing stagflation risks, and potentially triggering a recession. These concerns, combined with other bearish factors, have made individual investors the most pessimistic about the S&P 500's outlook in recent history. According to the American Association of Individual Investors (AAII) survey, the share of bearish sentiment surged from 40.5% to 61% in just one week, marking the highest level since September 2022.

Money continues to flee the US stock market, especially since alternative opportunities abound. Delays in tariffs have fueled rallies in European and Chinese stock indices. Meanwhile, the AI hype is no longer enough to sustain investor interest in US tech giants, given rising competition from abroad. Finally, as the S&P 500 tumbles, rising US Treasury prices provide an attractive domestic alternative for capital allocation.

US equity and bond yield trends

This image is no longer relevant

This image is no longer relevant

Capital flight is a major blow to the broad market index. There's hope that Trump's tariff threats won't materialize, but for now, investors are poised to play safe.

From a technical standpoint, the S&P 500 continues to develop a Broadening Wedge pattern on the daily chart. The short positions initiated at 6,083 and reinforced at 6,000 should be maintained, especially since the first of the two previously mentioned targets at 5,830 and 5,750 is now within reach.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The Market Took a Step Back

The longest winning streak of the S&P 500 in two decades has come to an end. But who's responsible? The Federal Reserve, which plans to keep rates unchanged

Marek Petkovich 10:16 2025-05-06 UTC+2

Markets Anxiously Await the Fed's Monetary Policy Meeting (Potential for Renewed Growth in Bitcoin and #NDX)

Markets remain tense. The U.S. Dollar Index and the cryptocurrency market are stagnating, caught between opposing forces. Investors are tensely awaiting the outcome of the Federal Reserve's monetary policy meeting

Pati Gani 10:02 2025-05-06 UTC+2

GBP/USD Overview – May 6: Trump Goes After the Film Industry

The GBP/USD currency pair traded upward during the first half of Monday and downward during the second half. While the U.S. dollar didn't lose much this time, its brief attempt

Paolo Greco 07:04 2025-05-06 UTC+2

EUR/USD Overview – May 6: The Protest Against Donald Trump Continues

The EUR/USD currency pair began a new upward cycle on Monday. At this point, no one is likely surprised by another drop in the U.S. dollar. The market started selling

Paolo Greco 07:04 2025-05-06 UTC+2

What to Pay Attention to on May 6? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic events scheduled for Tuesday. In the Eurozone and Germany, the second estimate of April's services PMI will be published, but these are unlikely to attract

Paolo Greco 05:49 2025-05-06 UTC+2

Fed Rate Cut Probability Is Near Zero

This week marks the third Federal Reserve meeting of the year. At the first two meetings, monetary policy parameters remained unchanged, and there is virtually no chance of a rate

Chin Zhao 00:50 2025-05-06 UTC+2

The Dollar Sell-Off Shows No Signs of Slowing Down

The latest CFTC report reveals that the dollar sell-off continues unabated. Weekly changes against major currencies amounted to -$3.1 billion, bringing the total accumulated short position to -$17.1 billion

Kuvat Raharjo 00:50 2025-05-06 UTC+2

GBP/USD. The Pound and Politics

The pound reacted negatively to the results of the local elections in the UK, where the right-wing Reform UK party secured a convincing victory in many districts. However, the British

Irina Manzenko 00:50 2025-05-06 UTC+2

XAU/USD. Analysis and Forecast

Gold continues to show resilience, climbing above the key psychological level of $3300. Geopolitical tensions stemming from the prolonged Russia–Ukraine conflict and escalating hostilities in the Middle East continue

Irina Yanina 17:45 2025-05-05 UTC+2

USD/CHF: Analysis and Forecast

The USD/CHF pair remains under pressure at the start of the new week, attracting sellers for the second day in a row, weighed down by several factors. However, spot prices

Irina Yanina 17:35 2025-05-05 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.